Wema Bank plc is in a growth spurt as it’s recently released full year 2014 results shows that profit surged 49.05 percent.
These impressive results by Wema Bank come as Nigerian lenders navigate the current tough macro environment.
The audited 2014 financial statement of Wema Bank showed profit after tax (PAT) surged to N2.37bn from N1.59bn the same period of the corresponding year (FY) 2013.
Return on equity (ROE) increased to 5.41 percent in FY14 as against 3.84 percent, a sign that the Bank is using shareholders resources to generate more profit.
The top line also followed the same growth trajectory as interest income increased by 24.21 percent to N35.45bn from N28.54bn; driven by strong growth in loans and advances.
Despite the tough operating environment evidenced by the hike in interest rate by the CBN, Wema Bank was able to keep interest expense flattish at N16bn.
A common trend in the performance of Nigeria lenders that have released results is their ability to reduce cost to income ratio, which makes them more efficient amid regulatory induced costs.
Wema Bank is efficient as its cost to income ratio reduced to 87 percent in 2014 from 96.27 percent as at December 2014.
However, operating expenses were up by 9.51 percent to N22.09bn compared with N20.17bn in 2013 as regulatory induced costs such as AMCON continues to weigh on the lenders.
Despite the seemingly attractive opportunities in the industry as the large parts of the population are unbaked, industry players are facing significant headwinds.
The insurgency in the north part of the country is another impediment on Banks growth as commercial activities in the crisis region are crimped thus slowing customer deposit growth.
Wema Bank was aggressive about lending as its loan to deposit increased to 56.94 percent to in 2014 from 44.64 percent in 2013.
Loans and advances to customers surged by 51.37 percent to N149.30bn compared with N98.63bn in 2013, while deposit to customers were up by 18.63 percent to N262.20bn as against N220.93bn in 2013.
Total assets were up by 15.60 percent to N382.56bn in 2014 as against N330.87bn in 2013.
Wema Banks’ share price closed at N0.93 on the floor of the exchange while market capitalisation was N36.33bn.
BALA AUGIE
